Tenant is using their security deposit to pay their rent. I want to show the transfer from security deposit account to rent payment account, and ALSO use that money to pay the invoice for their rent.
The journal entry is pretty straightforward.
Debit: Security Deposit Liability
Credit: Rental Income
If you are speaking of how to do it within a given software I would need to which one specifically and probably actually see what you are talking about.
I assume there is a Receivable already on the books for the tenant rent. We will debit security deposit Liability on the books for the tenant and credit the tenant A/R Account. We will transfer the amount of rent into operating account from the security deposit cash account. Debiting operating cash account and crediting security cash account.